The Senate Armed Service Committee recently passed the 2016 National Defense Authorization Act with changes in the new military retirement plan. There have been few changes over the last seventy years. With the passing of the National Defense Authorization Act, there is good news and bad news.
With the continuing struggle in Washington to come to grips with exorbitant spending and debt, Congress and the White House target the military for spending cuts in many areas. Troop reductions, slowing weapons development, retirement of obsolete systems and military pay and retirement are in their sights.
The current military retirement system requires service of a full twenty years before any benefits are accrued with few exceptions, medical retirees etc. While only 17% of the military members remain on active duty long enough to serve the full twenty years, those serving less receive no benefits.
The new system proposes a 401k style retirement plan with a combination of a Thrift Savings plan where the service members contribute their own funds in conjunction with a pension plan that vests in twenty years.
There is a lot to consider for our service members and potential new enlistees and there is a great deal more that the system must refine before we can see a final resolution to the problem.
For a more detailed explanation, see Ryan Guina’s article in The Military Wallet.
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